According to financial results released Wednesday, the losses on investments in real estate included $500 million in the institutional securities sphere and negative revenues of $300 million on the asset management side, along with non-compensation expenses of $200 million. Net revenues were also hurt to the tune of $1.5 billion by tightening credit spreads on fixed income sales and trading and equity sales, Morgan Stanley reported.

The $177-million net loss contrasted with a $1.4 billion net income for Q1 2008. Net revenues were $3 billion, down 62% year over year.

John J. Mack, chairman and CEO, says in a release that although "challenging markets" continued to affect Morgan Stanley's quarterly performance, "we saw improved performance across most of our businesses during the past three months." He adds that the company saw "strong results in investment banking, commodities, interest rates and credit products as well as solid performance in global wealth management. In fact, Morgan Stanley would have been profitable this quarter if not for the dramatic improvement in our credit spreads--which is a significant positive development, but had a near-term negative impact on our revenues." Long-term, Kelleher said on Wednesday, "We are well-positioned for growth in the global capital markets."